Key eurozone stock markets posted gains yesterday as a weaker euro gave exporters a boost, while London underperformed because of sharp falls in banking giant HSBC and other major companies following earnings updates.
London’s FTSE 100 closed 0.01% down at 7,246.77 points, Frankfurt’s DAX 30 closed 0.8% up at 12,487.90 points and Paris’ CAC 40 ended 0.6% up at 5,289.86 points, while the EURO STOXX 50 closed 0.8% up at 3,43.08 points yesterday.
“The FTSE 100 was held back by mixed results from HSBC, (miner) BHP Billiton and (hotels group) IHG,” said Jasper Lawler, head of research at London Capital Group.
Results for both HSBC and BHP “were characterised by missed estimates mixed in with signs turnaround plans are nearly complete,” he said. In closing trade, HSBC and BHP were both down 4.5%.
IHG shed 3% as the owner of the InterContinental and Holiday Inn brands said it planned no dividend payouts for 2018.
Market talk that the EU parliament is likely to urge the EU to give Britain privileged single-market access after Brexit underpinned the pound for most of the session, adding pressure on stocks in export-driven multinationals.
But the real force in forex markets was the dollar, which rose against the euro and yen, sparking a debate over whether the currency has finally embarked on a sustained recovery on the back of strong US growth.
“Could this be the start of an incredible rally or another dead cat bounce?,” asked Lukman Otunuga, analyst at FXTM.
He said growth and expected higher US Federal Reserve interest rates stood to boost the currency, but only if other central banks did not tighten credit as fast as the US central bank.
US stocks were lower as investors, returning to their desks after a long bank holiday weekend, found little reason to buy.
Instead, Wall Street is trying to second-guess the Federal Reserve’s reaction to rising inflationary pressure, and analysts are hoping for fresh insight into the central bank’s thinking when Fed minutes are released today.
Tumbling Walmart shares following results were the biggest feature in morning New York trading, weighing down the retail sector and the big indices.
Walmart reported higher sales in the fourth quarter, but also higher costs and slowing online sales, a red flag for investors interested in how well Walmart is competing with Amazon. Walmart shares were just under 10% lower approaching midday.
Elsewhere yesterday, bitcoin climbed to around $11,600 from $11,141.05 on Monday — when Bank of England governor Mark Carney said in a London speech that the cryptocurrency had “pretty much failed thus far on (...) the traditional aspects of money”.
He told Regent’s University: “It is not a store value. Nobody uses it as a medium of exchange”.
A statue of a bull is seen outside the Frankfurt Stock Exchange. The DAX 30 closed 0.8% up at 12,487.90 points yesterday.
